MARIJUANA INDUSTRY’S WILD WEST DAYS WANING
Companies that prioritize their end users’ well-being will survive, says Mike Harcourt.
The looming legalization of recreational marijuana on Oct. 17 has ignited a frenzy of activity among cannabis producers, retailers, investors, and commercial real estate companies, all hoping to cash in on the green rush.
Over the last few years, retail marijuana dispensaries have popped up like magic mushrooms in strip malls and on street corners in virtually every Canadian city. Law-enforcement officials have generally turned a blind eye to illicit pot shops unless there’s a complaint. It’s a throwback to the Wild West when it comes to the production and sale of cannabis in Canada, but the rules of engagement are about to change.
Once recreational cannabis is legalized, strict new rules will come into force, regulating cannabis production, retail advertising, product labelling and packaging. Limits will be placed on THC content for cannabis oils and oral products, but not for dried or fresh cannabis products. Edible cannabis products will not be legal immediately. Regulations will include several classes of licences for cultivation and processing, including obligations for record-keeping and the type of data that must be provided to government.
Despite this epic attempt to tame the Wild West, the industry players and mom-and-pop pot shops won’t discourage easily, and for good reason. By 2020, the Canadian cannabis industry is projected to have a retail value of $6.8 billion. That’s larger than the hard-liquor market and almost as large as the wine market, according to CIBC.
But with new players seeking cannabis gold on a daily basis, it won’t be long before the rush runs its course and the inevitable shakeout in the Canadian cannabis market occurs. It’s going to come down to survival of the fittest as startups grapple with how to gain the trust of clients with a safe, effective, legal product and brand while struggling to scale their operations, become more efficient and reduce costs.
For decades, the lucrative illicit marijuana market in Canada was dominated by organized crime. One of the oft-stated goals of legalization is to take cannabis out of the hands of the bad guys. Ironically, some of that has already happened. While the criminals are still around, they have, to a large degree, been pushed to the fringes by guerrilla grow operations and independent dispensaries creating a robust grey market for cannabis.
A number of independent dispensary proprietors readily admit that post-legalization they’ll likely shut down operations because their product comes from unlicensed producers.
There’s also the question of quality control. There have been several reported incidents of dried dispensary cannabis containing harmful contaminants such as chemicals, moulds and bacteria. In late 2016, some cannabis companies were forced to recall products after the banned pesticide myclobutanil was discovered in medical cannabis sold to clients. Other medical-grade cannabis purchased on the retail market has been found to have problematic formulations and debatable dosages.
Legitimate cannabis companies can’t ignore the reality that they will always be competing with these below-the-radar players for a piece of the market. But as cannabis gains acceptance among discerning consumers, the battle for market share will be won or lost on consumer trust, quality control and best industry practices, particularly in the medical marijuana market.
Emerging industry leaders understand the importance of adopting best practices in cannabis research, production and formulation to produce dependable high-quality products that meet specific market needs.
Building credibility for cannabis among consumers, patients and the medical community as a legitimate therapeutic option requires that producers take an evidence-based approach to developing medicinal products that fill the gaps in conventional medical treatments.
This hinges on the ability of producers to identify unique strains and adhere to stringent quality standards and environmental controls, eliminating the need for pesticides and fungicides during cultivation. This is particularly important given the difficulties some cannabis producers and distributors are having these days with quality, dependability and impurities. In the new era of legalized cannabis, marginal operators who can’t compete on quality will soon fall by the wayside.
The future of medical cannabis requires that companies take an integrated approach, tapping into the knowledge and expertise of various health-care disciplines to develop safe, proven products that support therapeutic outcomes. That’s the direction we’re taking at True Leaf, where medical doctors, naturopathic physicians and veterinarians are working to develop effective cannabinoid focused products for people and their pets that can be added to the arsenal of complementary therapies available to medical practitioners.
The Wild West days of the Canadian cannabis industry are numbered. As competition increases and consolidation continues, the leading companies that emerge once the dust settles will be those that make the needs and wellbeing of the end user their first and foremost priority.
Marginal operators who can’t compete on quality will soon fall by the wayside.